Capitalism and free enterprise are often seen as synonymous. In truth, they are closely related yet distinct terms with overlapping features. It is possible to have a capitalist economy without complete free enterprise, and possible to have a free market without capitalism. Any economy is capitalist as long as the factors of production are controlled by private individuals. However, a capitalist system can still be regulated by government laws and the profits of capitalist endeavors can still be taxed heavily.
Because some people argue that globalization help poor countries to become economically good state & make their living standards improve ,while others arguing that the creation of the free market concepts enable developed countries to make more money at the expense of poor countries resources, labour & cultural unbalances. So some part of the world helping globalization concepts & others resisting the concepts of globalizations, Actually most of them trying to see a balance between pros & cons of the globalization for example governments trying to manage the trading concepts based on the governmental objectives by creating new
The reason for this, is the core mechanics within a market economy. A market based economy is defined as “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.” (Merriam-Webster) As you can see minimum wage does not follow this rule of competition and the decisions of private investors. It is in the economy’s best interest to abolish minimum wage because it will cause an increase in employment, stimulate economic growth, and allows for an easier escape
This allows producers to study the demand and decide what will sell and generate the most income instead of waiting for the government to tell them what to make. Also producers in a free market economy price goods and services reasonably allowing consumers to afford more. This causes competition which helps to ensure that the best goods and services are offered at lower
According to Raymond Vernon, different companies come up with a new innovative product or service for local consumption and export the surplus in order to serve also the foreign markets. 2. The Internalization
One benefit that a free market offers to society is economic efficiency. Since, a free market is self-regulating, producers are entirely free to make their own choices on what services or products to purchase. Of course, due to supply and demand the most desired products by consumers will be produced because they are willing to pay at prices they want. Moreover, in a free market there is the most economic freedom compared to a communist system. For example, in a free market economy workers have the independence to work at whatever firm/business they want.
For example, the automotive industry, electrical equipment industry, and canning industry in the United States are controlled by several companies. The appearance of the oligopolistic market is mainly attributed to three reasons. First, due to the economies of scale, that is, manufacturers continue to expand production scale, and the market is relatively small. The second reason is due to the barriers to entry. The government grants monopoly power to certain enterprises in the industry through laws and regulations, and at the same time, it imposes certain controls on it
“Capitalism affords economic freedom, consumer choice, and economic growth. Socialism, which is an economy controlled by the state and planned by a central planning authority, provides for a greater social welfare and decreases business fluctuations.” - Here is what the ideas of capitalism and socialism are are trying to convey, Capitalism affords economic freedom and economic freedom, but socialism is an economy controlled by the state and planned by a central planning authority, provides for a greater social welfare and decreases business opportunities.” Consumer choice - Individuals choose what to consume, and this choice leads to more competition and better products and services.” - An advantage to capitalism is that since individuals decide what to buy, there is more competition, so better products and services. “The means of production are owned by public enterprises or cooperatives (the state), and individuals are compensated based on the principle of individual contribution.” - In socialism, companies are owned publicly by the state and individuals are paid based on the fact that they
There are two different types of competition in a market, monopolistic competition and free competition or also known as perfect competition. An example of a monopolistic competition or monopoly is the market in China, where only one company or firm distributes resources and good. An example of a perfect competition is the United States or Singaporean market in which people are free to enter or exit the market. The question is, is a free market competition better than a monopolistic market competition? A free market competition is better than a monopolistic competition because there is little constraint for people to enter or start a business in the market and consumers are able to set the price based on the demand vs. supply concept.